Did the ECB Just Warn Italian Voters Against Berlusconi?

The European Central Bank this week, for the first time, published details of its former bond-buying initiative, known as the Securities Markets Program. The timing of the release, on the eve of Italy's Feb. 24-25 elections, is as interesting as the data.

The bank used to publish weekly information on the total amount of bonds it purchased under the program, until August last year when ECB President Mario Draghi replaced it with a new one called Outright Monetary Transactions. At times during the financial crisis, this indicator was watched more closely than any other, as analysts feverishly guessed at what movements in the bond markets could be attributed to purchases by the ECB.

The bank has now provided a country-by-country breakdown of all bond purchases that the ECB made under the program for its duration. Italian debt accounts for roughly half of the total: 103 billion euros ($136 billion) out of 218 billion euros. Spain was a distant second, with 44 billion euros of its debt purchased by the euro area's central bank, followed by Greece (34 billion euros), Portugal (23 billion euros) and Ireland (14 billion euros).

It has surprised many analysts that the ECB offered so much support to Italy. But there is a political message in this data release, as well. In August 2011, the ECB stopped buying Italian sovereign bonds as a way to get the bond markets to put pressure on the Italian government, which at the time had gone back on its pledge to drive through structural changes to the economy. Yields on Italian 10-year bonds rose to more than 7 percent and Prime Minister Silvio Berlusconi had to resign later in the year.

Berlusconi seems unlikely to come back and win this election, but he has significantly reduced the gap between his center-right coalition and the leading center-left coalition during the course of the campaign. The ECB’s decision to reveal, on the eve of the vote, just how much support it gave to Italy looks like a shot across the bow.

The ECB may be telling the Italian electorate that it has supported Italy in the past, but the country may have difficulty accessing the bank's Outright Monetary Transactions bond-buying program should Berlusconi return to power. That would have disastrous results not just for Italy, but potentially for the entire currency union.

(Megan Greene is a Bloomberg View columnist and chief economist at the consulting firm Maverick Intelligence. Follow her on Twitter.)